TAKING STOCK.

Verizon's horizon hazy, but sales shine through

Q. Stock in Verizon Communications Inc. looks attractive to me because of its dividend yield of 3.86 percent. What's your opinion of the company?

B.F., via the Internet,

A. This wireless, long-distance and local phone service giant that has actor James Earl Jones as its pitchman is one of the only telecom companies with rising sales.

The product of the Bell Atlantic and GTE merger, it provides services to one-third of the U.S. population.

Verizon Wireless, its joint venture with Vodafone Group in which it owns 55 percent, has a nation-leading 33.3 million subscribers. While Vodafone says it remains "happily married" to that partnership, it's possible Verizon might sometime have to buy its partner out.

Verizon is the third-largest long-distance company, with 13.2 million customers, and has won regulatory approval to offer long-distance in each state it serves. Its heavily promoted DSL high-speed Internet service, with 1.83 million lines, will be a driving force for the company in the future.

Shares of Verizon are up 5 percent this year, following last year's 15 percent decline.

Though it is still the No. 1 U.S. local telephone company, Verizon has seen its local phone service revenue decline. It and other Baby Bells are losing local lines to rivals such as AT&T and wireless communications.

Verizon's "bundled" service now available in several states represents an important competitive step. It includes long-distance, local, regional, wireless and Internet access at a price much lower than taking these services individually. The one-contract, one-bill concept is similarly being introduced by competitors.

Verizon stock is rated midway between a "buy" and a "hold" by the Wall Street analysts who track it, according to the Boston-based First Call research firm. This consists of three "strong buys," 11 "buys," 17 "holds" and one "strong sell."

Earnings are expected to decline 11 percent this year, versus a 9 percent decline for the telecommunications industry. Next year's projected 1 percent increase compares with expected flat results for the industry.

The five-year annualized forecast of a 4 percent increase is the same for both the company and its peers.

To reduce its heavy debt load, Verizon recently agreed to sell its 34.9 percent stake in Mexico's Iusacell wireless service for $3.5 million in cash and a release from its obligations on Iusacell debt.

After a recent Federal Communications Commission order required wireless companies to offer "number portability" by Nov. 24 so customers may move their phone numbers to other carriers, Verizon announced it won't charge a switchover fee.

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Andrew Leckey answers questions only through the column. Send inquiries by e-mail to andrewinv@aol.com, or write to Andrew Leckey, "Successful Investing," #184, 369-B Third St., San Rafael, CA 94901-3581.